Starting your own business is one of the greatest investments you can make. If you have a solid idea and are willing to put in the time and hard work to make the idea flourish, you could be a successful business owner.
While many people dream of being their own boss there are also many risks that are overlooked. Before you start your own business here are three of the most common business risks you should be aware of.
According to report compiled by Lloyds of London the number one risk for businesses was high taxation.
While many large businesses have the necessary resources to help lower their tax burden small businesses do not. And, taxes can in fact play a huge role in a small business’ bottom line. Before you start your own business here are some thing to consider:
- What type of taxes will you have to pay?
- What will be your tax filing status? (sole proprietor, LLC, incorporation, etc.)
It’s important to consult a tax professional, like an accountant, who can help you determine what the best move for your business will be.
When you’re first starting out high taxes may not seem like a huge concern but as your income grows taxes can eat up a huge portion of your profits.
Loss of Customers
The second highest risk for businesses today is the loss of customers. With the economy still being down, and many people not spending money like they once were, customer retention rates have fallen.
When you first start your business your main goal will simply be finding a customer base. However, after you’ve found your first few customers how will you retain them and how will you will you continue to grow your client base?
Here are some things you can do to help protect your business from this risk:
- Tailor your product for a specific customer base
- Play around with your marketing plan until you discover the best method for attracting new customers
- Stay in touch with current and past customers and offer excellent customer service and support
If you can adapt your business as the economy changes you’ll have a much better chance of finding new customers and retaining current ones.
The third biggest risk businesses are currently facing is cyber-attacks.
Cyber-attacks have been on the rise over the last several years. In fact one in five small businesses face a cyber-attack each year. More astonishing is that 60 percent of those who have been attacked go out of business within six months.
Cyber risk may have never crossed your mind when you thought about starting a business but it is an ever increasing problem.
To help protect yourself from cyber risk here are a few things you can do:
- Encrypt your data
- Keep antivirus and antimalware software up to date
- Use strong passwords and a different password for each account
- Don’t share to much personal information
If you do these things you’ll lower your risk of being hacked. As your business grows you can even get insurance to protect yourself from cyber-attacks.
Starting a business can be one of the best investments you’ll ever make. It is important though, that you’re fully aware of the most common risks businesses face. This way you’ll be able to better protect yourself from the get-go.